Europe Biannual Construction Market Report 1Q/2Q 2025
Czechia
Top opportunities
Data centres: Rising demand for digital connectivity drives opportunities in modern, efficient data centres.
Financial institutions and regeneration: Expansion efforts and urban renewal fuel growth in these areas.
Government and municipal projects: Public infrastructure upgrades and urban development create strong tender activity.
Infrastructure and residential development: Investments in transport, utilities, and housing present significant opportunities.
Top trends
Digital tools and AI: The use of digital tools, data, and artificial intelligence is increasingly shaping business practices and operations in the region.
Green financing: The Czech Republic is embracing green financing, with increased investment in sustainable projects like renewable energy, energy-efficient buildings, and clean transport.
Local economic indicators
Czechia's year–over–year (YoY) gross domestic product (GDP) growth for 2024 is projected to have been 1%, with further acceleration expected to 2.4% in 2025 and 2.7% in 2026, according to the European Commission. This growth has been driven by strong household consumption and investment activity with investment levels being supported by increased EU funding through the Recovery and Resilience Plan (RRP), growth in residential construction, and foreign direct investment (FDI). When viewing GDP compared to the previous period, QoQ, Eurostat reports that Czechia experienced a growth of 0.5% between 2Q and 3Q 2024.
Eurostat also reports that in 2024, the construction industry’s gross value added, which measures its contribution to Czechia’s overall GDP, remained stable at approximately 5% of the total GDP.
Eurostat’s Harmonised Index of Consumer Prices (HICP) is forecast to have averaged 2.7% in 2024, with declines to 2.4% in 2025 and 2% in 2026 predicted, representing a significant improvement after two years of double-digit inflation and a peak of 19.2% reported in January 2023. Lower wholesale energy prices have been the primary driver of this decline, although sticky service inflation, due to wage growth, has prevented further reduction.
Unemployment is forecasted to have remained relatively stable with 2024’s figure of 2.6%, one of the lowest in the EU, only predicted to increase to 2.7% for 2025 and 2026 respectively. Wage growth is projected to remain high over the next two years, ranging between 5% and 7%, bolstering household incomes and contributing to economic recovery.
Construction materials
Eurostat's November data on local industrial producer prices shows significant month-over-month (MoM) price decreases in clay, 1.7%, and steel tubes, 1.4%, and a significant increase in electrical distribution,1.8%. When looking at YoY figures we can see relative stability in most indices with an increase in wood, 8.5%, and a decrease in steel tubes, 7.2%, standing out. When indexing for June 2022, when oil prices peaked due to the Russia-Ukraine conflict, we can see price recovery across most sectors with steel tubing standing out with a reduction of 32.2%. However, price increases have still been experienced in some sectors with the largest reported figure being 19% in electrical distribution. Regular updates to project allowances are deemed essential to ensure alignment with evolving market conditions. See the following table for MoM, YoY and indexed pricing.
Market outlook
In December, Czechia’s construction confidence indicator, CCI, worsened slightly, decreasing from -5.3 in November to -7.8. This movement contrasts with the improving trend observed since June, when the year-to-date (YTD) low of -12.4 was recorded. December’s decline was primarily driven by a downward shift in the evolution of order books, which fell from -14.1 to -17, and was supported by a drop in employment expectations, which decreased from 3.5 to 1.4. However, it is important to recognise that a decrease in the CCI in countries with colder climates during the winter months is also part of a cyclical trend influenced by adverse weather conditions, which slow order books and reduce work expectations.
Insufficient demand showed signs of improvement in December, decreasing to 21.6 from the 3Q/4Q average of 27, including a notable drop from 25.3 in November. Price expectations for the next three months remained stable, with December recording a figure of 22.4 and labour shortages, while still the most significant constraint on construction activity, remained consistent at 45.8.
Local office input
Labour shortages, particularly in skilled trades, continue to pose a significant challenge, even as contractor interest in tendering has increased compared to the previous year. While prices are expected to remain in line with overall inflation, despite ongoing labour constraints, complex and prolonged permitting procedures persist, causing delays that impact the timely commencement of projects.
Looking ahead, recent Request for Proposals (RFPs) suggest a higher volume of office building projects in the second half of 2025, with construction management emerging as the preferred procurement method. At the same time, a reported rise in consumer demand for mortgage loans from local banks may help accelerate the pace of residential projects in the near future.
As always, Gleeds advises regular project budget updates that consider recent market pricing and local risk factors that may impact project programmes and costs. Undertaking risk analysis studies enables better evaluation and preparation of appropriate contingencies for your particular project conditions and risk exposure.
VŠCHT - University of Chemistry and Technology, Prague — Gleeds provided Quality Management, Quality Inspections/ and Technical Due Diligence services.
